If I file bankruptcy, will I lose everything I own?

No, you will not lose any property unless you choose to surrender it voluntarily. In affording a debtor a fresh start, there are specific statutes in place to help you protect your property from the claims of creditors and the trustee. Generally, a Chapter 7 Trustee will not take any property that has no value over and above the amount owed on the property to a third party plus the amount you can claim exempt. Under state and federal law, you are allowed to keep your house, car, household furnishings, tools of your trade, and other property up to certain amounts. Your experienced bankruptcy attorney can help you maximize the amount of property you can protect.

Will my credit be ruined because of filing bankruptcy?

Not necessarily. Your credit record will certainly not be improved by having a bankruptcy filing on it. Under federal law, a bankruptcy can remain on your credit history for up to 10 years. However, if you already have problems on your credit history such as repossessions, judgments, missed payments, etc., filing bankruptcy will not make your situation worse. Depending on the type of bankruptcy petition you file, you may find it easier to obtain short-term credit because after you complete your bankruptcy case, many of your debts are eliminated. Creditors know that you cannot receive another discharge in bankruptcy for 4 to 8 years. You will be able to find sophisticated creditors who place more weight on whether the customer has the ability to make a payment rather than whether they filed bankruptcy. It seems reasonable that if you have consistently made your payments under a Chapter 13 plan for five years, a potential lender might consider that consistency in his/her decision to extend credit to you.

Can I choose which debts I want to get rid of and keep other debts?

No. Under the bankruptcy code, you are required to list all of your debts, all of your property, all of your expenses and all of your income. You will be asked several questions that will help disclose property you may have transferred or that has otherwise left your possession within the past three years. Even though you have to make a full disclosure of your financial situation, each debt will have a specific treatment in your case. For example, even though your mortgage must be reported in your bankruptcy case, if it is current, you will likely be able to make your house payment as usual each month.

What if my house is in foreclosure?

Usually, if your house is in foreclosure, you are behind in your mortgage payments. It may not be feasible to catch the payments up right away. In that case, you will probably want to consider filing under Chapter 13 which will stop the foreclosure proceeding immediately at whatever stage it is in. Even if your house has already been sold in foreclosure, it may not be too late to stop the foreclosure if you take action within ten days of the sale. Under Chapter 13, you would be allowed to bring your mortgage current by making your regular payment and 1/60th of the amount past due per month for sixty months to a trustee. The Trustee would disburse your payments to the mortgage company during your sixty-month plan. At the end of the sixty-month period, provided you have made your required payments in a timely and consistent manner, you would be allowed to resume your regular monthly mortgage payment.

If I have decided to file bankruptcy, should I keep making my debt payments?

Depending on the type of debt, you may want to stop making your payments prior to filing a bankruptcy case in the relatively near future. If the debt is secured, meaning that something you own has been pledge as security for the debt and could be taken away if the payments are not made, you may wish to keep making the payments. On the other hand, if the debt is unsecured, meaning that it is a credit card, medical bill, etc., you may consider saving that money since those debts will likely be discharged (eliminated) in your bankruptcy case.

Can I stop a wage garnishment?

Yes. Bankruptcy generally stops most wage garnishments. In addition, if wages are garnished after you file your case, you may be able to get those wages returned to you. Note, however, bankruptcy will not stop wage garnishments based on a domestic support obligation such as child support, alimony or separate support.

Can I get rid of a payday loan?

Yes, Payday loans are generally dischargeable depending on the chapter you file and your income and expenses. (A payday loan is a loan in which you authorize a lender to take money out of your account on your payday to repay the short-term loan. These loans carry extremely high interest rates.)